Category Archives: Mutual Fund Commentary

July 1, 2017

By David Snowball

Dear friends,

It’s summer time, an especially blessed and cursed interval for those of us who teach. On the one hand, we’re mostly freed from the day-to-day obligation to be in the classroom. Some of us write, some travel, some undertake “such other duties as may from time to time be assigned” by our colleges. On the other hand, we hear the clock ticking. All year long, as we try to face down a stack of 32 variably-literate essays at 11 p.m. Sunday night, we think “if I can just make it to summer, I’ll recharge and it’ll be great!” About the first thing we notice when summer does arrive, is that Continue reading →

Autonomous vehicles, huge gaping sinkholes and your portfolio

By David Snowball

I wonder, occasionally, about a world dominated by self-driving cars, sometimes called “autonomous vehicles.” GM announced in June that they’ve piloted 180 autonomous vehicles and that they’ve got the capability to begin mass production of them. For now, they’re committing $600,000,000 a year to the development.

Last year, Goldman Sachs projected that, between driver-assistance technology and autonomous vehicles, the market will grow from about $3 billion in 2015 to $96 billion in 2025 and $290 billion in 2035. One key is Continue reading →

Launch Alert: Artisan Thematic Fund (ARTTX)

By David Snowball

On April 24, 2017, Artisan Partners launched Artisan Thematic Fund (ARTTX). The managers seek to identify secular themes that will have an enduring impact on business, ideally identifying those themes sooner and more clearly than their competitors. There’s a point at which a development transitions from being geeky-cool to being a driver of corporate profits; Artisan refers to that as Continue reading →

June 1, 2017

By David Snowball

Dear friends,

And they’re off!” signals both the start of a horse race and the end of a class’s years at college.

Augustana just launched 485 more grads in your direction. It’s our 157th assault on adult life, and one of our largest. I’m pleased that Mike Daniels was the student selected to speak at commencement but he’s so durn Augie. Mike’s a defensive lineman, but also a jazz musician. He’s an accountant, but also a first team NCAA Academic All-American. He’s been to Italy (with the football team), but also managed to sneak in three internships on his way to working for Deloitte & Touche. He’s a good man who overtly rejects “good enough” as a goal; that is not, he said, Continue reading →

The Dry Powder Gang, updated

By David Snowball

“Put your trust in God but keep your powder dry.”

Oliver Cromwell, 1650, to the soldiers of the New Model Army as they prepared to forge an Irish river and head into battle.

Cromwell was a dour, humorless (or “humourless”) religious fanatic charged with squashing every Catholic and every independent thought in the British Isles because, well, that’s what God demanded. Famine, plague, deportations, mass death and deportations followed.

But even Cromwell knew that the key to victory was Continue reading →

Time to put on your big-boy pants and check your investments

By David Snowball

As I noted in my publishers letter this month, this article, originally published in May, contained a substantial and utterly boneheaded mathematical error. After we published it, two things happened: first, readers took the article seriously enough to find the error and report it; second, our colleague Charles, substantially revised the method for calculating the maximum drawdown for funds in my portfolio which haven’t been around for a full market cycle. Because those changes were material, we decided to re-present this article as a public service.

Sorry, I don’t have a really gender-neutral alternatives to “big-boy pants.”

In all likelihood, you might expect to experience considerable ugliness in financial markets in the months ahead. That’s not a timing call, it’s a statement of the obvious.

What’s behind it?

The bull market in stocks is Continue reading →

Briefly noted

By David Snowball

It’s been an unusually busy month in the industry, with nearly three dozen funds liquidated or slated for liquidation, as well as a surprising number of open funds closing to new investors and closed funds opening to them. And, as ever, the “smoke and marketing” crowd has re-branded a bunch of funds; most, not surprisingly, aren’t very good. Continue reading →

May 1, 2017

By David Snowball

Dear friends,

The theory says that our academic year ends in two weeks. As I gazed this morning across rows of slightly-stunned faces, I realized that the college’s schedule and the students’ don’t always align.

With the weather turning toward summer, the lawn calling and the campus in bloom, I’m intensely sympathetic. Continue reading →

Morningstar Investment Conference 2017: Six smart guys

By David Snowball

I’ll tell you about the six smart guys. They represent a bit over half of the interviews and discussions I participated in during Morningstar’s annual Fest at the McCormick. My normal schedule mixed one-on-one interactions with sitting in on panels and keynote presentations; the changing emphasis of the conference, rather away from hearing from mutual fund managers and strategists, and toward the business concerns of the advisors, led me to focus exclusively on talking with interesting folks.

Many of these interviews will serve as the seedbeds for upcoming fund profiles. In particular, we hope to celebrate Continue reading →

Launch Alert: Rondure Overseas Fund and Rondure New World Fund

By David Snowball

On May 1, 2017, Rondure Global Advisors, headquartered in Salt Lake City and one of the nation’s few woman-owned fund advisers, launched Rondure New World Fund (RNWIX/RNWOX) and Rondure Overseas Fund (ROSIX/ROSOX ). Rondure Global operates in partnership with Grandeur Peak Global, which offers back office and trading support, as well as the opportunity for collegial investment discussions. Rondure’s founder, CEO and lead portfolio manager is Laura Geritz, who describes this partnership as “one of our key competitive advantages” since it will give her the opportunity, rare for a manager launching a new firm, to focus on investment rather than management.

Both funds will follow the same Continue reading →

Briefly Noted . . .

By David Snowball

On April 20, 2017, UMB announced that it signed an agreement to sell Scout Investments and Reams Asset Management to Carillon Tower Adviser, a wholly owned subsidiary of Raymond James. In announcing its 2016 creation, James described Carillon as “new company to provide transparency and create efficiencies among its asset management firms.” As I note in our story on the Morningstar interviews, Carillon wasn’t particularly transparent and the guy representing Scout was curt to the point of being rude.

Sentinel Asset Management has agreed to sell its mutual funds to Touchstone. Details aren’t yet available.

The previously announced plan to Continue reading →

April 1, 2017

By David Snowball

Dear friends,

Welcome to spring!

The weather’s getting better. It’s not clear that the quality of writing about mutual funds is.

“This couple followed the 11 tips to picking good mutual funds and now they’re rich!”

Ummm … they’re lying on a bed of British pounds so unless they made a Continue reading →

Morningstar to the industry: Move over. We can do it better ourselves.

By David Snowball

On March 6, 2017, Morningstar announced their intention to displace 50 existing mutual funds from their $30 billion Morningstar Managed Portfolio program and replace them with nine brand-new Morningstar-branded funds. Understandably, there’s been a bit of interest in the financial media, though much of it is behind paywalls. (I’m not complaining, by the way. Journalists need to be compensated.) The most notable “free” articles are:

Advisers split on Morningstar’s new mutual funds

Morningstar makes bid to offer mutual funds for exclusive use of advisers

Like everyone else, Morningstar expands its advisory business

By far the most thorough and balanced piece was How and why Morningstar sliced 16 bps for RIAs by dumping third-party mutual funds and stamping its Switzerland brand on its own mutual funds, written by Janice Kirkel of RIABiz. Continue reading →

Launch Alert: 361 US Small Cap Equity ASFQX

By David Snowball

On December 30, 2016, 361 Capital Management launched 361 US Small Cap Equity (ASFQX). This fund is the newest embodiment of an investment strategy initiated by John Riddle and Mark Jaeger of BRC Investment Management. Messrs. Riddle and Jaeger co-founded BRC in 2005, then merged with 361 Capital in October 2016. BRC was managing about $800 million in assets at the time of the merger, 361 had about $1.3 billion.

What do you need to know? Continue reading →

Briefly Noted

By David Snowball


Third Avenue Management, Marty Whitman and former president David Barse have agreed to a $14.25 million cash settlement of a lawsuit brought on behalf of investors in Third Avenue Focused Credit. The fund, if you recall, made headlines first through huge losses in the completely illiquid positions that dominated the portfolio, then by moving all of its assets into a locked trust which kept investors from reclaiming their money. The plan was to liquidate the illiquid when “rational” prices prevailed; after about 18 months, that process is still not complete. The whole mess has cost Third Avenue over $3 billion in assets and threatened its Continue reading →

March 1, 2017

By David Snowball

Dear friends,

 It’s spring! Could you tell the difference where you are? March 1 is the beginning of “meteorological spring” and I’m indisputably in the middle of Augustana’s Spring Break. (It always looked better on MTV.) Spring training has begun for major leaguers while Augie’s baseball team is currently 5-1 on their swing through Florida. I’ve just placed my order for a flat of native prairie plants (the “Happy Hummer” collection plus a few extra Jack in the Pulpit, Chip’s favorites) and have been paging through the Burpee’s catalog.

The announcement of spring does seem a bit tardy. Our February saw more 70 degree days than days with snow. Coming into this month, the Quad Cities had seen three 70 degree February days ever. We had five 70 degree days in the last 10 days of February, including the warmest February day in Continue reading →

Snowball’s potato portfolio

By David Snowball

I like gardening rather more than I like investing. I garden because it’s joyful, healthy and engaging. Most recently, I planted my first potato patch with four artisanal varieties of tubers, one each of russet, gold, red and blue. That meant adding a considerable quantity of organics and a bit of sand to a 4×4 south-facing patch that had been mostly weeds. You’re also supposed to “hill up” potatoes as they grow but I couldn’t, for the life of me, figure out quite what that meant in the context of an open patch of earth. Instead, I collected grass clippings (a safe practice since I don’t chem my lawn) and kept everything but the leaves buried.  I’m stunned and delighted to report that it actually worked. I dug around in October and there was, like, food in the ground! Continue reading →

Has your fund been left behind by Morningstar?

By David Snowball

If so, you’re not alone.

There are hundreds of funds which Morningstar once covered that they can no longer afford to follow.  Morningstar started as seven guys working out of Joe Mansueto’s apartment. They’re now a publicly-traded global corporation with 3900 employees and $130 billion in assets under management (or advisement). More importantly, they’re a corporation with $600 million in annual expenses.

If you’ve got $600 million in bills, you really need more than $600 million in income and you don’t get that by worrying about small funds that aren’t on most advisors’ radar, especially when the entire universe of active funds is contracting.  Morningstar explains the rules this way, “We’re committed to covering those investments that are most relevant to investors and that hold a significant portion of industry assets.” In this case, “relevant” is pretty much Continue reading →

Launch Alert: Polen International Growth Fund (POIRX/POIIX)

By David Snowball

On December 30, 2016, Polen Capital Management launched Polen International Growth Fund (POIIX). The fund is an international extension of the high-conviction strategy behind Polen Growth (POLRX/POLIX) and Polen Global Growth (PGIRX/PGIIX). Polen has over $9 billion in assets under management and is located in Boca Raton, Florida, “far away from the short-term pressures of Wall Street.”

The fund will typically invest in 25 to 35 large cap international stocks, including those domiciled in both developed and developing markets. It might, from time to time, dabble in a few mid-cap names. The manager will focus on Continue reading →